The schedule below gives the demand curve facing a monopoly firm.

Price	Quantity Sold	MR
8	0
7	1
6	2
5	3
4	4
3	5
2	6
1	7

Table 1: Demand schedule facing a monopoly

(2.1) What is the marginal revenue for a perfectly price discriminating monopolist from the sale of each unit of output?

(2.2) If the firm’s marginal cost is constant at $3.00, what is the output produced by a perfectly price discriminating monopolist?

(2.3) What is the total revenue received by a perfectly price discriminating monopolist at the profit maximizing level of output?

(2.4) Assuming that fixed costs are zero, what is the total cost incurred by the monopolist at the profit maximizing level of output?

(2.5) Assuming that fixed costs are zero, how much profits are earned by the monopolist at the profit maximizing level of output?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Monopoly: Consider a monopoly firm facing a demand curve Q = 100– P. The marginal...

Monopoly: Consider a monopoly firm facing a demand curve Q = 100 – P. The marginal revenue curve is therefore MR= 100 – 2Q. This firm has fixed costs =$1000 and constant marginal cost =$20. Total costs are $1000 + $20Q and average costs are $1000/Q + $20. a. What is the firm’s profit maximizing level of output? What price does it charge to sell this amount of output? How much profit does it make? Show your work. b. Suppose...

Consider a monopoly firm facing a demand curve Q = 100 – P. This firm has...

Consider a monopoly firm facing a demand curve Q = 100 – P. This firm has fixed costs =$1000 and constant marginal cost =$20. Total costs are $1000 + $20Q and average costs are $1000/Q + $20. a. What is the firm’s profit maximizing level of output? What price does it charge to sell this amount of output? How much profit does it make? What is consumer surplus at this level of output? Show your work.(8) b. Suppose this firm...

Is a monopoly with the following cost curve facing the following demand curve a natural monopoly?...

Is a monopoly with the following cost curve facing the following demand curve a natural monopoly? P(Q)=100-5Q C(Q) = 8,000 + 10 Q2 A.Yes B. No C. Cannot be determined from the information provided

The Marginal Revenue curve facing a monopoly firm is a) identical to its demand and average...

The Marginal Revenue curve facing a monopoly firm is a) identical to its demand and average revenue curve. b) perfectly elastic. c) below its demand and average revenue curve. d) the same as it is for a perfectly competitive firm. For a firm in a perfectly competitive market a) The firm must decrease price if it wants to sell an additional unit of the product b) The demand curve is downward sloping c) Price = Average Revenue = Marginal Revenue...

Question : A monopoly market structure firm is facing the following demand curve Q = 1800...

Question : A monopoly market structure firm is facing the following demand curve Q = 1800 - 25P. Its short-run total cost is given by :100+7Q+0.025Q2. Find the following for this firm: a. His profit maximizing quantity, price and TR? b. If this firm want to incur an average selling cost of Rs 33 per unit will the firm face below, above or just normal profits?

The blue curve on the followinggraph represents the demand curve facing a firm that can...

The blue curve on the following graph represents the demand curve facing a firm that can set its own prices.Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph.Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly.On the graph input tool, change the number found in the Quantity Demanded field to...

The demand curve facing a perfectly competitive firm is: a) the same as the market demand...

The demand curve facing a perfectly competitive firm is: a) the same as the market demand curve b) downward-sloping and less flat than the market demand curve c) downward-sloping and more flat than the market demand curve d) perfectly horizontal e) perfectly vertical The supply curve for a competitive firm is: a) its entire MC curve b) the upward-sloping portion of its MC curve c) its MC curve above the minimum point of the AVC curve d) its MC curve...

73. In perfect competition, the marginal revenue curve and the demand curve facing the firm are...

73. In perfect competition, the marginal revenue curve and the demand curve facing the firm are identical. intersects the demand curve when marginal revenue is minimized. is always above the demand curve facing the firm. is always below the demand curve facing the firm. 75. Marginal revenue is the additional profit the firm earns when it sells an additional unit of output. the added revenue that a firm takes in from selling an additional unit of output. the difference between...

The blue curve on the following graph represents the demand curve facing a firm that can...

The blue curve on the following graph represents the demand curve facing a firm that can set its own prices. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. On the graph input tool, change the number found in the Quantity Demanded field...

Monopoly with linear inverse demand. Consider a monopolist facing a linear inverse demand curve p(q)= a-...

Monopoly with linear inverse demand. Consider a monopolist facing a linear inverse demand curve p(q)= a- bq, and cost function C(q)= F + cq, where F denotes its fixed costs and c represents the monopolist's (constant) magical cost a>c 1. Graph demand, marginal revenue and marginal cost. Label your graph carefully, including intercepts 2. Solve the profit maximizing output q^m. To do this, first write down the expression for MR=MC and solve for the optimal quantity. Next find the price...

Subjects